"We are pleased to report higher than expected revenues in a period of soft economic growth," said L.M. Baker Jr., chairman and chief executive officer. "This performance clearly demonstrates the focus of Wachovia employees in serving customers and building a firm foundation for the proposed merger of equals with First Union. During the period, we also maintained diligent expense control and continued to take prudent and aggressive actions to mitigate credit risk and strengthen loan loss reserves."
| Wachovia
Corporation (WB) |
Second Quarter |
|
First Six Months |
| |
Operating Earnings |
Continuing Operations(1) |
|
Operating Earnings |
Continuing Operations(1) |
| Financial
Summary (2) |
2001 |
2000 |
2001 |
2000 |
|
2001 |
2000 |
2001 |
2000 |
| Operating net
income ($ millions) |
$252.7 |
$143.3 |
$230.8 |
$104.5 |
|
$505.2 |
$407.8 |
$458.2 |
$326.3 |
| Operating
earnings per diluted share |
$1.22 |
$.70 |
$1.11 |
$.51 |
|
$2.44 |
$2.00 |
$2.21 |
$1.60 |
| Total revenue
($ millions) (3) |
$1,146.0 |
$1,119.2 |
$983.8 |
$938.0 |
|
$2,276.1 |
$2,218.8 |
$1,957.4 |
$1,859.1 |
| (1)
excludes the results of the credit card business |
(3)
includes taxable equivalent net interest income and other operating revenue |
| (2)
excludes nonrecurring charges |
|
Reported net income was $245.1 million or $1.18 per diluted share for the second quarter compared with $137.6 million or $.67 per diluted share a year ago. Continuing operations, excluding the consumer credit card business, had earnings of $223.2 million or $1.08 per diluted share for the quarter compared with $98.7 million or $.48 per diluted share for the same period of 2000. Included in reported pretax earnings were merger-related charges of $11.7 million relating to Wachovia’s acquisition of Republic Security Bank and the proposed merger of equals with First Union. Second quarter 2000 reported pretax earnings included $8.9 million in merger-related charges.
Total revenues, excluding securities gains, rose $26.8 million from the second quarter of 2000 and were up $15.9 million from the first quarter. The net yield on interest earning assets was 3.97 percent as compared with 4.22 percent in the second quarter of 2000 and 3.93 percent in the first quarter. Average loans rose $4.5 billion or 8.7 percent from the second quarter of 2000, with strong growth in commercial and residential real estate as well as other retail loans that exceeded declines in the commercial and credit card portfolios.
During the quarter, Wachovia took advantage of the lower rate environment by realizing gains on securities transactions. These gains offset the increased provision for loan losses resulting from aggressive actions to reduce credit exposures and strengthen reserves. The provision for loan losses was $215.7 million for the second quarter compared with $121.5 million in the first quarter. At June 30, 2001, the allowance for loan losses represented 1.60 percent of outstanding loans, compared with 1.50 percent at the end of the first quarter. Nonperforming loans were down $30 million from March 31, 2001, to $380 million at June 30, 2001. Net loan losses of $160.1 million for the second quarter were above the $118.7 million reported in the first quarter, in part reflecting loan sales. As a percentage of average loans outstanding, net loan losses were 1.13 percent for the second quarter 2001 compared with .85 percent in the first quarter.
Operating expense, excluding nonrecurring charges, increased modestly from the second quarter of 2000 and first quarter 2001.
Wachovia will hold a conference call to discuss these results on July 11, 2001, at 10 a.m. (Eastern Time). The call will be available via the Internet at www.wachovia.com/investor/earnings.asp or by calling 719-457-2637. Replays of the conference call will be available from 2 p.m. July 11 until midnight July 18 at the same Internet address or by phone (719-457-0820, access code 730974).
This news release contains forward-looking statements regarding Wachovia Corporation. All forward-looking statements involve risk and uncertainty and actual results could differ materially from the anticipated results or other expectations expressed in the forward-looking statements. A discussion of factors that could cause actual results to differ materially from those expressed in the forward-looking statements is included in Wachovia's filings with the Securities and Exchange Commission.
Shareholders are urged to read the joint proxy statement/prospectus regarding the proposed merger between First Union and Wachovia and any other relevant documents filed with the SEC because they contain important information. Shareholders may obtain a free copy of the joint proxy statement/prospectus, as well as other filings containing information about First Union and Wachovia, without charge, at the SEC's Internet site (http://www.sec.gov). Copies of the joint proxy statement/prospectus and other SEC filings that will be incorporated by reference in the joint proxy statement/prospectus can also be obtained, without charge, from First Union, Investor Relations, One First Union Center, Charlotte, North Carolina 28288-0206 (704-374-6782), or from Wachovia, Investor Relations, 100 North Main Street, Winston-Salem, North Carolina 27150 (866-883-0789).
Additional information can be found in the Investor Relations section of Wachovia’s Web site at www.wachovia.com/investor.
Please note: Links to Web sites outside wachovia.com are provided for information purposes only. External sites are not owned, sponsored or endorsed by Wachovia, and Wachovia is not responsible for their content.
